For most of us, our biggest financial investment, will be the purchase of a house. The need for shelter is a necessity of life. However, in recent years, housing markets are more focused on investment, than shelter. Australian house prices have climbed steadily over the past 20 years. Most first home buyers are now shut out of the market – even with government assistance. Still the Australian home ownership dream continues, and mantras about the value of bricks and mortar abound:
- Housing is an appreciating asset not a liability (i.e. house prices only go up)
- Mortgages are good debt, not bad (i.e. borrow as much as the bank will lend)
- Rent is dead money (i.e. renters are poor stewards of money)
In order to follow this dream, Australians have given up many things. We have become two-income households in order to meet rising mortgage payments. This has led to a postponement of having children. The raising of our children has been outsourced to childcare centres. Stress levels have increased as job insecurity threatens our ability to service our debt. The equity we hoped to build up is non-existent, due to our withdrawals for bouts of retail therapy and vacations. The invisible hand that now guides our life, is not God, but government, the reserve bank and interest rates. The mark of the debt beast is clearly tattooed on our foreheads.
The reasons for explosive house growth are many. The Australian tax code has made bad housing investments a viable option through negative gearing. Increasing state tax revenues are embedded in new land releases. Also, poor planning and infrastructure development has restricted supply and forced many families to the urban fringes. (Don’t get me started on what long commutes do to a healthy family life). Our demand for bigger McMansions has also contributed.
However the reasons for a housing price correction are also many. In the past six months we passed a tipping point in which the mainstream media have become decidedly bearish. “Just take a look at the US housing market and consider what may happen if that was replicated here”, they say. After house and utility payments, we have no discretionary income left. Therefore, consumers are shutting up their wallets, causing retailers to close their stores, and jobs to be lost. Our ability to give toc those in need is eradicated. Something will snap.
So what are we to do?
1. Let’s have a value adjustment. As Christian’s we all have a physical and luxurious mansion being built in heaven (John 14:2). So let’s not be consumed by building our castle here on earth.
2. Let’s limit debt. Debt is not a intrinsically a sin, but being a slave to debt is. Let’s cast aside debt so we are free to serve Christ.
3. Let’s model contentment, fiscal restraint and godly priorities in our buying habits and thought life.
4. Where we have enslaved ourselves, lets show ask for wisdom on how to recover. It may mean cutting up a credit card, renting a home, or driving an old car.
At the end of the day, our life is not our house. Our life is found in Jesus. As the old song says, “This World is not my home, I am just passing through”
Disclaimer: I do have a home mortgage. Everyday I must remind myself of its correct place in my life. It is a struggle.